City fails to audit contract for affordable art studios; Officials subsidized rents by $4M to $6M

SMO — City Hall has allowed an artist to rent a significant piece of public property at a discount, passing up $4 million to $6 million in revenue over 10 years, in hopes that he would in turn provide creative space to other artists at a reduced rate.

Converted from an old City Hall-owned hangar at the Santa Monica Airport, Santa Monica Art Studios is touted as an affordable option for creative minds. (Daniel Archuleta daniela@smdp.com)

However, an investigation by the Daily Press reveals that there is no proof the artist is doing so.

There has been no audit of Santa Monica Art Studios owner Yossi Govrin over the last decade to ensure he is providing subsidized rents to artists so that they can remain in the area, known for its high rents that can often be prohibitive to those in the creative field.

Govrin ignored Daily Press e-mails seeking comment for this article and hung up on a reporter when reached by telephone.

Ten years ago, City Council chose to lease a 22,500-square-foot hangar space on the Santa Monica Airport property to Govrin under the condition that his art studios be subleased to tenants at affordable rates, starting at “about $150/month, going up to about $750/month, with the average space being about $350/month,” according to the 2001 staff report that council approved.

In return, city officials said, Govrin would get the space at the monthly rate of 65 cents per square foot, well below the $1.50 to $3 market rates.

One former artist said she paid about $850 per month for one of the smallest studios in the hangar.

Negotiated to start in January of 2004, the contract leased the space to Govrin at a monthly rate of 37 cents per square foot (with inflation, the Art Studios is now paying 43 cents per square foot, still far below the original recommended rate). There was no mention of affordability other than a promise, in an attached document, from Govrin to offer rents at a monthly average of $1.50 per square foot.

The reduced rental rate is perhaps due to upgrades Govrin made to the space. Attached to the contract are construction estimates totaling up to $550,000. Govrin would not provide receipts showing how much was actually spent on construction, but that total of $550,000 is still several hundred thousand dollars less than the contract’s unexplained discount.

Then-City Manager Susan McCarthy, who signed the contract, said that Jeff Mathieu, who is now city manager of Big Bear Lake, negotiated the lease. Neither of them had any memory of the contract.

Current city officials, most of whom were not working for City Hall at the time of the contract negotiation, could not explain the contract’s divergence from council’s orders.

“The contract does not give (City Hall) the ability to audit them,” Public Works Director Martin Pastucha said.

The lease ends in June of next year, he said, and City Hall will look closely at whatever council decides.

City Hall will negotiate a contract that “would be more reflective of council’s policy,” he said.

“But I can’t speak to the past,” he added.

Currently there are 39 artists renting studios, according to the Art Studios’ website. The Daily Press reached out to 25 artists who are currently or were previously renters. Several current subleasers responded saying that they were happy with the space and refused to reveal what they were paying.

Since city officials have not been monitoring the contract, Govrin has not been forced to provide his income from the subleases.

Govrin flatly refused to discuss how much artists are paying for space taxpayers technically own and Sherry Frumkin, who joined Govrin as co-director of the Art Studios, said that discussion of what artists pay would be “awkward.” City Hall, she said, has never asked them for the information.

There are those in the art world and City Hall who don’t seem concerned, saying that there are few spaces available for artists so the loss of revenue to City Hall is worth it if artists can remain in the city by the sea and help contribute to its reputation as a haven for the creative.

“What has been suspected for some time is that the end-user artists don’t seem to be getting the deal we had envisioned,” Councilmember Kevin McKeown said in an e-mail. “Nonetheless, the facility has become a valued and important part of Santa Monica’s arts community.”

Today the space would fetch about $3 per square foot monthly, according to an executive at a Los Angeles brokerage firm specializing in creative office space, or about $2.36 per square foot in 2003 dollars.

Conservative calculations (the monthly $1.50 square foot rate acknowledge as the low-end market value by city officials in 2001) show that in providing Govrin with the space, City Hall passed on $4.1 million in revenue over the last 10 years. Calculations using numbers provided by experts in creative office space show it passed on $6.1 million.

This comes at a time when there is a shortage in public arts funding. As evidence, City Hall has asked the public to raise the funds, an estimated $400,000, to pay for repairs to “Chain Reaction,” a controversial sculpture by Pulitzer Prize-winning cartoonist Paul Conrad that sits on a prime piece of real estate in the Civic Center.

Creative office space is also at a premium.

“Santa Monica doesn’t have enough office space,” Jason Harris, economic development manager for City Hall, told the Daily Press last month in response to the fact that Riot Games, an international gaming company, announced that it was leaving its Santa Monica headquarters for West L.A.

Just another story of pockets being lined in Santa Monica! Yossi Govrin must be a friend of the family…and quite wealthy by now. No surprise. This sort of thing has been happening around every SM corner since the 70′s.

This batch chew each-other up and spit each-other out. Tough and greedy, we did have a few like that years ago… our judges were also property owners here and played many a ‘private pocket’ games… sometimes what I see and know leaves me totally speechless.

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